High P/E stocks should be preferred because they pay larger dividends.

Name: High P/E stocks should be preferred because they pay larger dividends.
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Question

Quizplus · Accepted Answer

High P/E ratios indicate that investors are paying more for each unit of income, which often means the stock is valued for its growth potential rather than its current dividend payouts. Stocks with high P/E ratios often reinvest earnings into the business rather than paying large dividends.

High P/E Stocks Should Be Preferred Because They Pay Larger